Index funds by life insurers vs mutual funds: What's a better deal

A clutch of life insurance companies recently launched small-cap index funds, marking a new trend. Life insurers rarely launch such funds: Mutual fund (MF) companies do that.

There is a catch: To invest in a small-cap index fund of a life insurance company, a customer will need to invest in a ULIP (Unit-Linked Insurance Plan). A life insurance company can add an index fund to its suite of ULIP offerings, but a customer can invest in such a fund if she buys a ULIP.

A ULIP doubles as an insurance and investment product. Mutual funds are pure investment products. In